Background: this delivery method often select the contractor

Background:

The project delivery method is the process by which a construction project is comprehensively designed and constructed for an owner including project scope definition, organization of designers, constructors and various consultants, sequencing of design and construction operations, execution of design and construction, and closeout and start-up.1 Currently, available project delivery methods have gone through so many iterations from the traditional master builder approach from renaissance period. In a master builder approach, a single person will be responsible for the duties of architect, engineer and contractor.2 There are four major project delivery methods available in the building industry.

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Design-Bid-Build

Design-bid-build, or “hard bid” as it is often referred to in the construction industry, is the traditional project delivery method and involves three primary entities, through two separate contracts in three sequential project phases as follows:

Design-A designer will be selected by the owner to provide the whole design documents prior to the bidding and building phases.

Bidding-This is the point where the contractor is selected, typically using a low bid method.

Build-The selected contractor now performs the whole bidding process with coordination with the lowest bid sub-contractors.

Design-bid-build is the most often used for of project delivery in non-residential construction in the United States.  Owners using this delivery method often select the contractor based on the lowest price bid. Under the design-bid-build approach, the owner has separate contracts with the designer and the builder. Thus, if a design error is found after the complete design, the owner is liable to contractor to pay the changes and thereafter owner must legally approach design team for the compensation. While in theory this should be possible, in practice it is very difficult, because the owner must prove that the designer has liability based on negligence or another legal theory.3 The advantages and disadvantages as noted in the literature are as follow:

Advantages:

1.      Design changes easily accommodated prior to start of construction.4

2.      Low bid cost which results in maximum competition.

3.      Defined roles/responsibilities for the team.

4.      Plans are fully developed prior to contractor bidding and award.5,6

Disadvantages:

1.      Owner at risk to contractor for design errors.4

2.      Lowest bidder may not understand the project scope, goals, and objectives.

3.      Requires significant owner expertise and resources.

4.      No contractor input in design, planning, or value engineering (VE).

5.      Owner control over general contractor’s staff is limited.7

 

Design-Build

Design-Build is a project delivery method in which owner holds a single contract with the design-builder. The design-builder is awarded the project with less than 100% complete plans with the expectation that the design-builder will complete the design and construct the project. In the past decade, use of design-build has greatly accelerated in the United States, making this delivery method one of the most significant trends in design and construction today. The advantages and disadvantages as noted in the literature are as follow:

Advantages:

1.      The guaranteed maximum price is established early and owner risk is controlled.

2.      The Design Build team is fully responsible to the owner for the delivery of a project.

3.      Opportunity for cost sharing.

4.      Construction often starts before design completion, reducing project schedule.4

5.      Transfer of design and construction risk from owner to the DB entity.

6.      Enhanced constructability and innovation.5,6

Disadvantages:

1.      Minimal owner control of both design and construction quality.4

2.      Potentially conflicting interests as both designer and contractor.

3.      Process may not bring the best designer and the best builder together for the owner.

4.      Difficult to establish criteria for selection of D/B team.

5.      An overly involved owner can impede the design-build process. 8

 

 

Construction Manager at Risk

Construction manager at risk is a project delivery method in which owner hires the contractor to deliver the project within a guaranteed maximum price (GMP). Owner will have two separate contracts with the designer and contractor, however with establishing GMP earlier contractor can be involved in the early stages of the project. Construction manager at risk offers the alternative of a customer-oriented approach to project delivery, through collaboration during the design phase that is based on trust between the owner, construction manager, designer, and commissioning provider. It allows for constructability input and early cost feedback and the ability to “fast track”. Using an open-book approach to trade subcontracts, it rewards performance and can be less risky to the owner, with the potential for fewer claims/lawsuits and fewer change orders.  With a construction management at risk project, the designer and construction manager are typically selected using a best value methodology and the subcontractors are selected based on the lowest bid. The advantages and disadvantages as noted in the literature are as follow:

Advantages:

1.      Increases the speed of the project and can also strengthen coordination between the architect/engineer and the construction manager.

2.      Ensures high quality at low cost.9

3.      The owner may be involved in sub-contractor selection

4.      Early construction manager involvement to control budget and schedule.

5.      Utilize Building Information Modelling (BIM) to ensure constructability of the design while minimizing cost and schedule

Disadvantages:

 

1.      Design team may not take input from construction manager during design.

2.       The owner may be financially liable for exclusions and inconsistencies in the contract documents.

3.      The construction manager can assume design liability via review comments, unintentionally.

4.      Since the guaranteed maximum price is settled before design begins, it is difficult for owners to know whether they received the best possible bid; this fact also lowers competition in pricing contractor overhead, fee, and subcontract costs.9